My Watchlist – October 25, 2010

I have reviewed issue 9 of Value Line and added companies that have exceptional returns on equity. I am moving the posting of this list to Monday in order to make it more timely. The list is not perfect and some judgment is required in deciding whether to include a particular stock. As always, I welcome your feedback and comments.

The idea here is to have a dashboard of substantially all the larger-cap high quality businesses in the U.S. in one place that you can review at least weekly to see what Mr. Market is making available to you.

Here is the updated watchlist.

Stocks Added This Week

Caterpillar Inc. (CAT)

Donaldson Company, Inc. (DCI)

Graco Inc. (GGG)

The Middleby Corporation (MIDD)

Stanley Black & Decker, Inc. (SWK)

The Toro Company (TTC)

AMETEK, Inc. (AME)

Danaher Corporation (DHR)

Honeywell International Inc. (HON)

ITT Corporation (ITT)

3M Company (MMM)

United Technologies Corporation (UTX)

POSCO (ADR) (PKX)

Goldman Sachs Group, Inc. (GS)

TD Ameritrade Holding Corp. (AMTD)

Check Point Software Technologies Ltd. (CHKP)

Matthews International Corporation (MATW)

A few thoughts…

Many stocks are close to new highs and are well above their lows. Some caution is in order.

The key to getting the most out of the list is to review it on a regular basis. In time, some obvious opportunities will emerge.

The author of this blog is NOT an investment, trading, legal, or tax advisor, and none of the information available through this blog is intended to provide tax, legal, investment or trading advice. Nothing provided through these posts constitutes a solicitation of the purchase or sale of securities/futures. The data and information presented in this blog entry is believed to be accurate but should not be relied upon by the user for any purpose. Any and all liability for the content or any omissions, including any inaccuracies, errors or misstatements in such data is expressly disclaimed.

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2 thoughts on “My Watchlist – October 25, 2010

  1. Andrew Schneck

    All the companies I consider great from this issue are also listed by you, and there are some you listed that I consider solid but not “great”, but I have some trouble with two of your listings:

    Caterpillar- the high debt load causes the high ROE, without the debt, it is an average company. The debt probably will not be paid back in the next 5 years through their earning power, and the company consumes much of its cash flow each year for a relatively smaller growth rate than I’d like to see. Not one I’d keep an eye on, best described as a 2nd or 3rd class business.

    The Middleby Corp- has reinvested its earnings into much lower-return areas than in previous years. It is a result of getting less sales per dollar of assets than in the past. The efficiency of their assets is decreasing & their business has largely held the same margins; it is a result of asset turnover declining… could continue declining in the future, not a company I’d say is great. Could be an interesting situation if you understood the underlying fundamentals, but as you’ve noted (and I’ve definitely been aware), most of these companies are far above a good price to pay would be. Not worth digging further at today’s price.

    Reply
  2. Greg Speicher Post author

    Andrew, as always, I appreciate your insightful feedback on the watchlist.

    CAT is included because it is widely held by several value-oriented investors. Agreed that MIDD’s returns have been lower.

    With this type of broad watchlist, I tend to err on the side of inclusion rather than exclusion so as to not miss something. Please keep your feedback coming.

    Reply

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